'Sure, but by that logic one would not invest in any company at...

'Sure, but by that logic one would not invest in any company at all, because factors that are of such a magnitude that they could do serious damage to Challenger's brands, are totally unpredictable and indeterminate..'

Really... Those factors are identifiable, risks are quantifiable & can be estimated. I consider brand risk to be significant for Challenger, 1. We have a strong brand now, 2. A shift in consumer confidence in the Challenger brand will very quickly lead to a large reduction in new annuities - In my opinion it doesn't take much doubt or concern for people to hold of their life savings from a company.

'In my experience, industry leadership tends to induce a virtuous cycle of success, whereby the strong simply keep getting stronger as they use their various advantages (scale, capital, technology, IP, risk management, etc.) to continuously drive a competitive wedge further between them and their lesser competitors.'

How many of those incumbents maintain 98% market share over the long term? None is the answer.

It goes against all principles of capitalism to think a single $7 Billion company can hold 98% market share, 18% ROE & there will never be a serious competitor because its 'too hard'. Only way that type of protection occurs is a patent or an asset that is virtually impossible to replicate (think government companies/infrastructure).

The annuities business is free to all, there is no protectionism. It may be hard, it may take time and money, but it is possible. There is fundamentally no reason qualified persons could not start a competing company.

'By contrast, this is the long-term financial well-being of a great many citizens that we are talking about here.'

I'll argue that is exactly why competition will exist. Monopolistic companies are the most likely to overcharge, maintain poor customer service & least likely to innovate. Regulated choice is the best thing for the great many citizens we are talking about here.

'has a massive balance sheet and deep IP which would take 2 decades to replicate,'

Not a chance annuity specific actuarial knowledge take 20 years to develop. Nope.
Let along the idea that a competitor stems from Challenger itself. Think a group of ambitious senior staff not progressing as they all can't. It's what happens in professional companies, consulting especially. Oh look, a group of people with most of the IP & intimate systems knowledge.

To deny the possibility is to have you head in the sand.

'No, I would certainly not be in on any potential entry into the annuities management field, with a view to taking away some of Challenger's business.'

I was posing a tounge in cheek way to discuss the prospect of a competitor.

*** I like being the devil in here but here is something of a bone ****
I am invested in Challenger because of their massively dominant market position, in a rapidly growing market that is heavily positioned to riskier products. Our management, our market & our company is so far one of the best on the ASX. We provide a fantastic product, which I am still shocked how little it is used in our society.

Someone asked me recently what I thought fair value is, well my current highest confidence value is $12 with a range of $-2 to $+5. So if the current trend continues I will likely shift my sentiment to a buy.